In March 2007, i posted a blog post in which i wrote: the spread of IT would one day result in death of currency notes/coins. There i also credicted that process resulting in eradication of Black Money. Recently a reader requested me to clarify the same. It works like an ERP model. I'll explain the base model here:
There should be a Central Registry (like server) managed by the Government, which is linked to payroll system of all the employers (govt, pvt, societies, etc) & vendor payment system of all businesses.
Suppose a person's salary is One Lakh per month, that value/amount is directly credited to that persons bank account. The same model (ie transfer of VALUE in electronic form) can be applied for all the transactions (buying/selling). Also all the bank accounts of a person should be linked to an Unique Identification Number (UIN) and no person can have more than one UIN. Thus, even if a person maintains more than one bank account, total assets of that person are consolidated through UIN account. Based on that, tax shall be automatically calculated for the total amount (using UIN) and debited to the respective government accounts.
The same process shall be replicated for vendor payments too. In case of change in payment structure, the payroll systems and vendor systems should relay those changes automatically to UIN through the central server. Likewise the system is linked for every input & output. If there is excess credit (abnormal increase) over and above the defined limit (ie eligible payment), then the system should generate a report on the same and automatically forward it to the investigation department, which shall in turn issue show cause notice.
This system should also have provision for accepting credits as gifts & loans. However limit for high value gifts should be defined and the system programmed to reject the same (especially those gifts from vendors to decision makers / businesses). This will limit corruption to greater extent. Likewise all transactions can happen over the electronic medium (even alms payment through mobile credits as mentioned in 2007 post), without the use of paper money.
Purchases can be validated through the combination of smart card / biometric devices. Thus, when all transactions happen over e-form, all the earnings/spending of a person is documented and controlled to near perfection. That would pave way for eradication of black money and limit corruption to greater extent.This is just a base model. With better defining and controls at right places, this can be made a robust system.
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